China stresses need for airspace reforms

China's Vice Premier Zhang Dejiang stated further efforts should be made to expand reforms in institutional mechanisms and administration for airspace during the 12th Five-Year Plan (2011-2015) (Xinhua, 18-Jun-2011). "The 12th Five-Year-Plan period is a vital time for speeding up transformation of the mode of development, along with deepening reforms in air traffic control," he said. He added that it is imperative to solve congestion problems.

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There are two essential elements to the airline industry: flying aeroplanes and selling (and buying) seats. More technically this can be described as (1) operational; and (2) marketing and sales. There are other important activities, such as lobbying government to limit competition, and exploiting frequent flyer programmes, but those two are the core activities now facing disruption.

The former is unique to airlines, is uniquely regulated and engages massive governmental regulatory intervention, technical and economic. The marketing and sales activity has some aspects particular to aviation, but generally differs little from any other form of retail – except that most older airlines have tended to be particularly slow at learning the art.

This analysis reviews the nature and degree of disruption in each core area and what potential the future holds. In the regulatory area, China will be the big disruptor as it expands into its new global role; and technology and the associated rise in consumer empowerment will transform the process of buying and selling tickets. It will happen sooner than we expect.

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The airline is evaluating further expansion in China and elsewhere in North Asia in 2H2017 if it succeeds at securing additional A330s. Malaysia Airlines continues to seek leases on up to four A330s, which would result in a fleet of 19 aircraft.

Overall seat capacity will be up by 5% to 6% in 2017. Passenger numbers could potentially increase by more than 10% as Malaysia Airlines aims to significantly improve its load factor on the back of new lower fares.